How low oil prices are slamming hybrids and electric cars

Toyota Motor Corp. Executive Vice President Mitsuhisa Kato poses with a Toyota new Prius at the automaker's showroom in Tokyo, Wednesday, Dec. 9, 2015. Sales for the Prius dropped 10.9 percent in 2015, marking the first time annual sales were down since the hybrid was introduced in 1997. (AP Photo

The Associated Press

Toyota Motor Corp. Executive Vice President Mitsuhisa Kato poses with a Toyota new Prius at the automaker's showroom in Tokyo, Wednesday, Dec. 9, 2015. Sales for the Prius dropped 10.9 percent in 2015, marking the first time annual sales were down since the hybrid was introduced in 1997. (AP Photo/Shizuo Kambayashi)

Toyota Motor Corp. Executive Vice President Mitsuhisa Kato poses with a Toyota new Prius at the automaker's showroom in Tokyo, Wednesday, Dec. 9, 2015. Sales for the Prius dropped 10.9 percent in 2015, marking the first time annual sales were down since the hybrid was introduced in 1997. (AP Photo/Shizuo Kambayashi) (The Associated Press)

Low oil prices translate into low gasoline prices, which has blunted the incentive for many U.S. consumers to buy vehicles that go farther on a gallon of gas — or in the case of all-electric vehicles, that don't use any gas at all.

Sales for hybrids and alternative energy cars in the U.S. were down 13.2 percent in recently released figures by Kelley Blue Book that looked at sales in 2015 compared to 2014.

At the same time, luxury compact sports utility vehicles surged 36.8 percent and mid-sized pickup trucks were up 40.8 percent.

As a result, in perhaps the biggest irony of the collapse in oil prices, the hybrid car and electric vehicle sector that has used its relative independence from fossil fuels as a major selling point is suffering nearly as much as the oil industry.

"The low price of oil is affecting car manufacturers and all kinds of sectors of the economy," Irani said.

National sales for the Prius dropped 10.9 percent in 2015, marking the first time annual sales were down since the hybrid was introduced in 1997.

Chevrolet sold 18.1 percent fewer Volts in 2015 than the previous year.

The all-electric Nissan Leaf was down a whopping 42.8 percent from 2014 to 2015.

Despite warnings about a warming planet and a Paris Climate Summit attended by President Obama and other world leaders, it seems environmental concerns only go so far when it comes to buying a car.

"We consistently find that the top two factors, regardless of segment, whether you're looking at a small car or a huge luxury SUV or a pickup truck, are reliability and safety," Anand said in a telephone interview. "Fuel efficiency for a lot of people isn't a top-five important thing anymore."

California registrations, 2015

Land Rover +39.4%

Jeep +29.8%

Source: IHS Automotive

U.S. sales, 2015

Hybrids -13.2%

Luxury compact SUVs +36.8

Midsized pickup trucks +40.8%

Prius -10.9%

Volt -18.1%

Leaf -42.8%

Source: Kelley Blue Book

Why not?

Because SUVs are not the gas guzzlers they used to be.

"The spread between a hybrid and an SUV has diminished," Anand said. "It used to be that an SUV got you 20 mpg and a hybrid got you 50. And yes, that 30 mpg difference is a big deal, especially when gas prices are higher.

"But now you can get SUVs with 30 mpg highway now, no problem. Now that the gap has been narrowed and gas prices are lower, I think that's one of the critical reasons hybrids are suffering."

Acevedo said customers — especially in California — still care about the environment but "when you look at the SUV landscape right now, it not the same. It’s not a yellow Hummer that’s tearing up the road.

"The best-selling SUVs, like the Honda CRV, are something comparable to a mid-sized car in almost every way as far as emissions go."

And while driving Tesla may be the ultimate cultural status symbol for some, the alternative car icon does not appear immune to the downturn either.

Tesla's media relations department did not respond to a request from the San Diego Union-Tribune for an interview but during an investors call last month CEO Elon Musk didn't mention lower gas prices as a reason for the down-tick.

Instead, he pointed to tweaks Tesla made on its Model X at the end of last year.

"We limited Model X production for a period of time to maintain our quality production standards," Musk said.

For all the attention Tesla gets, the company makes up just a tiny fraction of the auto landscape and industry analysts look at the company as something akin to an outlier.

"Tesla is almost like a lifestyle, something people aspire to rather than just a car brand," Anand said.

Even beyond the issue of low gasoline prices, another thing slowing down the electric car market is something the industry calls "range anxiety" — motorists' concerns that an electric car could leave them stranded should it exhaust its charge.

While predicting oil prices has always been a tricky game, most energy analysts don't see oil supplies tightening soon.

Even if oil demand bounces back, shale producers have proven remarkably resilient and quick to get oil back on the market.

In addition, the recently completed nuclear deal with Iran is expected to bring about 1 million more barrels of oil per day onto the global market as sanctions get lifted on Tehran.

Acevedo thinks low gas prices for an extended time present a real threat to the hybrid/electric car industry.

The price of a gallon of gas is "going to have to get to $5 for people to freak out and go buy themselves a hybrid or an EV," Acevedo told the Union-Tribune in a telephone interview. "That’s the kind of stimulus that segment needs. Right now it looks like gas prices are poised to continue dropping. Long term it’s definitely going to hurt."

Supporters of alternative vehicles point to some hopeful signs, though.

Tesla plans to roll out the more affordable Model 3 — proposed to be listed at about $35,000 — March 31.

A re-designed Prius with a snazzier look has just hit dealerships with Toyota promising drivers better handling.

Later this year Chevrolet unveils its all-electric Bolt that promises to more than double the range of typical plug-ins to 200 miles while promising to sell for as low as $30,000.

"You’re looking at vehicle that could really shake things up if it gets the traction I’m sure Chevy is hoping for and a lot of people are expecting," Acevedo said.

"We're keen to see if automakers start touting the fact these cars are good cars that happen to get great mileage or great range or whatever rather than marketing them as hybrids first," Anand said. "Because what you're seeing with hybrids right now is that sales aren't doing well."